Bogus Anti-Tax Ad Opposes Big Oil Subsidy Elimination

There’s a new $1.25 million television, radio, and online advertising campaign making the rounds with misinformation intended to stave off efforts by grass-roots organizations and those in Congress who are trying to eliminate the billions in government give aways to big oil.  

 

In their current ad, the National Taxpayers Union (NTU) is suggesting that energy companies are facing threats of “new taxes” and relying on “foreign oil” to address our energy crisis, a crisis that has become more apparent since higher gas prices at the pump have arrived.  What struck me odd about this ad was it’s claim about new taxes being proposed in Congress for the oil industry.  My suspicions were confirmed when I did a little back ground check on NTU and what their comments in this were based on.

To call these “new taxes” is laughable unless you use fantastic stretches of the imagination.  The oil subsidies Congress allows for Big Oil have become more public recently.  They are part of some 7 year-old legislation that was intended to provide tax breaks for many companies for use in building and strengthening their businesses.

It’s a tax break created in 2004 under the Bush White House that essentially was intended to help start-up companies and to keep existing companies competitive during tough economic times.  Unfortunately, such government largesse can continue when businesses become highly profitable and no longer need them.  Apparently there was no wording in the legislation this came from, section 199 of the American Jobs Creations Act of 2004, that would trigger a need to stop them at a certain point.

The claim by the NTU ad on this is woefully misleading.  At a time when major oil companies are making historic profits and gas prices for consumers are also at historical highs, there is no longer a need to use taxpayer money to prop up this corporate special interest.  Removing these subsidies for profitable oil companies is not likely to have any direct impact on lowering gas prices but it is money that can be redirected either to lower the deficit or be applied to other start-up businesses that do need it, such as clean, renewable energy systems like solar and wind turbines.

The NTU ad also makes the bogus argument that this “tax increase” will affect consumer prices and jobs.  This is a typical scare tactic by the industry to affect people on what most concerns them – their job and their paycheck.  Yet the only way this increases the costs of good and services for oil and oil-related products is if the industry refuses to pass this revenue adjustment on to their historically high profits rather than on to the consumer.  If they are unwilling to help control costs for most Americans during these tough economic times by ensuring that their stock holders don’t suffer, it is disingenuous to blame this on efforts to remove a tax payer gift as a source of these cost increases.

When industries complain about losing their tax credits and how it will affect consumer prices they fail to mention that their tax credit was in effect a “cost increase”.  When we lose Treasury revenue through tax cuts and tax credits, the bills and interest on the national debt still need to be paid and that means someone else has to shoulder that responsibility.  That “someone else” is usually American working families

Many entrepreneurs benefit from this deduction as they produce products that create jobs.  But there are other large profitable companies who, like the oil industry, no longer depend on it to stay competitive.  Corporate profits from agribusiness are enhanced with this deduction to the tune of $4.9 billion each year.  No doubt G.E used this tax write off that allowed them in all likelihood to pay little to no taxes and perhaps even get some back in the form of a “tax benefit”.

And lastly, perhaps the most blatant distortion/deception of the ad was NTU’s claim that the White House has “banned production on most American oil and gas, costing the U.S. billions, and making us more dependent on foreign oil”.  The banned oil production myth was dispelled shortly after Michelle Bachman falsely claimed this at CPAC earlier this year.

At that convention Bachman said that only ONE new drilling permit had been allowed “under the Obama administration since they came into office.”  The truth, as Politifact.com’s checkers found out, is that 39 shallow-water permits for new wells have been issued since June 8, 2010 and “six deepwater well permits issued since Oct. 12, 2010, when the gulf moratorium was lifted. Five of those were for projects that were under way prior to the moratorium.”   If that claim is inaccurate, which it is, then that would most likely mean the claim that it was “costing the U.S. billions” is also not very credible.

The sad part is that we do have to buy foreign oil but not because our own oil production rates and capabilities are down or ineffective.  It has more to do with the fact that we simply don’t own enough of the world’s oil reserves to meet our economic needs.  We possess as a nation only 3% of global oil reserves yet use nearly 25% of that global total.  Thus out of necessity we depend on oil from other “foreign sources”.

Some of those foreign sources are not on our “A” list of friends like Iran, Venezuela and Saudi Arabia.  But people like Brazil and Canada are, so Obama’s claim in the ad about wanting “to be a major customer” of Brazil’s oil is a good thing, not one we should become irate over.  If you want to get irate over something try getting mad about the support many in Congress continue to give the fossil fuel industry in comparison to the renewable energy sources that ultimately will carry us into the 21st century.

NTU has been around for about 40 years.  It seeks to reduce taxes across the board but has often aligned itself with corporate interests like Big Tobacco’s Phillip Morris.  According to Sourcewatch.org a “1991 Philip Morris Communications presentation indicates the company’s intent to utilize its corporate Contributions Program to develop NTU as a ‘strategic vehicle’ to advance PM’s corporate objectives”.  Grover Norquist was also associated with NTU in its beginning years.  Norquist is the head of his own tax reform organization, Americans for Tax Reform, that works religiously to eliminate social welfare programs like Social Security and Medicare/Medicaid as well as eliminating taxes that solely benefit the wealthiest 2% in this country.

NTU’s ad is only one example of corporate friendly political ads that get away with information intended solely to distort the reality and gain public support for wealthy self-interests.  I would love to see a true grassroots ad campaign that would have rapid response ads to such distortions but the amount of money needed to fund such efforts often falls way short of the $1.25 million that corporate-funded organizations like the National Taxpayers Union collected for this recent misrepresentation.

Related Article:

Big Oil’s Good Deal 

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11 responses to “Bogus Anti-Tax Ad Opposes Big Oil Subsidy Elimination

  1. So, how can they say this stuff then? Does truth in advertising not apply to them. It’s not a twist of truth; it’s a blatant lie. I think you should run. I do. US Rep or senator. I might even change state residences to vote. 🙂

  2. Unfortunately there is a taint of truth there in just the amount that allows them to circumvent violations of the truth in advertising laws. The FTC is supposed to monitor this but it is not clear if political misrepresentation is covered as product misinformation is.

    According to this information, Truth-in-advertising regulations protect consumers from false or misleading advertising. These laws require advertisers to tell the truth about products and to be able to prove claims.

    Is political messaging considered a consumer product?

    As for running for office, I’d have a better chance in your state of Pennsylvania than I would in Texas. But thanks just the same Donna. 🙂

  3. I think it should be a consumer product…why? We are paying these people therefore we are consumers of their actions…..but try getting that past SCOTUS…..slim chance…..dammit!

  4. Sorry, LB, unfortunately you would be toast in a Texas election. Constantly we hear “if we could just drill more here, we’d have tons of oil and the prices would come down…simply supply and demand…yada yada yada”, but no one ever points out that anything we can drill here, in the Gulf, or even in ANWR is just a drop in the bucket compared to our appetite. SIMPLE, indeed.

    • Yes, I couldn’t even pretend to be a centrist here so that would automatically disqualify me.

      The other thing about new drilling with our limited resources is that it takes roughly 10 years from the time they get the permit until the oil is pumped, refined and ready for consumption. It will be a classic case of too little too late.

  5. Your thoroughness is always appreciated. Thanks for debunking this NTU ad. It’s disgusting how they twist words and fact with such an important issue. And, as you mentioned, the grassroots movement can never come up with that kind of money to properly counteract these false claims.

  6. On the oil thing…..why would speculators, those people that drive oil prices up, change their tactic if we drill here and why would oil companies give up their massive profits….no matter where the oil comes from?

  7. Your “Historical Oil Prices” chart stops abruptly on 03/28/2008, more than three years ago. Perhaps this chart would provide an update of oil prices since then:

  8. Oops! My bad. The chart I linked to was for foreign exchange (Forex) markets. Serves me right for not reading it more closely. This chart is for oil prices:

    • Carl,

      Brent crude oil prices are currently at $112.00 a barrell. Are you thinking that we will ever see gas at anything significantly less than what we are currently seeing? If so, what is that based on?

      Demand is increasing with China and India in the game now and production levels are as high as they have ever been in most areas.

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